The new adtech is disruptive, and that’s a good thing

I was at Luma Partners’ Digital Media Summit today. Great event, saw lots of familiar faces. I watched the adtech panel. Of the people I didn’t get a chance to invest in, these are four of the smartest: Brian O’Kelley, Joe Apprendi, Michael Barrett, and Mike Leo.

Mike Leo said something that struck me as wrong. He said, roughly, “30% of the media spend is getting spent on the pipes”–by which I think he meant the other panelists’ companies–“and that’s eating into the creative and the content, where it should be spent.”

This is exactly the wrong way to look at it.

The entire process between the maker of a product or service and the user of that product or service–what we call marketing–is friction. This includes the pipes, the ads themselves, and even the content created to wrap the ads. Friction, all of it.

I agree that we should reduce the friction, make things more efficient. But if we give credit to Wanamaker’s 50% waste in advertising spend, then the 30% that’s now being spent on the “pipes” is a 40% improvement. A 40% improvement over five years is pretty spectacular. But disruptive technologies do that.

Leo is looking at the wrong place–he’s complaining about the one area of the marketing process that has actually shown efficiency gains, while giving a pass to creative and content, the areas that have fallen behind.

One Comment

A great point. Social graph data is something that will additionally reduce friction by allowing very quick and easy sharing of targeting and personal info with marketers on consumers’ terms. I will soon provide an analysis framework for understanding how much this will reduce friction, and will be happy to share here with your readers (whose number I have now rejoined!).

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